Quiz 16 Corporate strategy - Mergers and acquisitions STRAT MAN

overcome its competitive disadvantage against Nike

Adidas acquired Reebok primarily to _____.

Managerial hubris

FlyOne Airway's decision to acquire TrueGear Fuels Inc. proved to be ill-fated because its managers had overestimated their abilities and skills. They believed that they had the skills to manage such diversified businesses and create additional shareholder value. However, the acquisition failed to create the anticipated synergies because the managers' capabilities were restricted to the airlines industry. What does this scenario best illustrate?

fill gaps in its competency lineup.

Google, the leader in online search and advertisement, engaged in a number of smaller acquisitions of tech ventures. It did this in order to

By lowering competitive intensity in the industry overall

How did the recent horizontal integration in the U.S. airline industry provide benefits to the surviving carriers?

It has access to convenience stores and new distribution channels

How does Kraft Foods benefit from its hostile takeover of Cadbury PLC in 2010 (Strategy Highlight 9.1)?

It has access to convenience stores and new distribution channels.

How does Kraft Foods benefit from its hostile takeover of Cadbury PLC in 2010 (Strategy Highlight 9.1)?

An acquisition

The Mansion Hotel Group purchased Red Brick Hotels for an estimated value of $120 billion. All the hotels previously owned by Red Brick Hotels are now managed by the Mansion Hotel Group and are known as Mansion hotels. What does this scenario best illustrate?

preempt its competitors from buying Waze.

The main reason behind Google's decision to acquire the Israeli startup company Waze for $1 billion was to:

principal-agent problems.

The managers at Movo Automobile Inc. want to diversify their business by acquiring a consumer electronics company. This acquisition would mean increased job security, higher compensation, and greater decision-making authority for the managers. The managers correlate this acquisition with greater power for them rather than to the appreciation in shareholder value. In this scenario, this acquisition by Movo Automobile is most likely a result of:

Horizontal integration

Titan Autos Inc. merged with its competitor, Cadvia Autos Inc. This allowed Titan Autos to use its technological competencies along with Cadvia Autos's marketing capabilities to capture a larger market share than what the two entities individually held. What does this scenario best illustrate?

acquisitions-led growth strategy

To position itself more strongly after the 2001 bursting of the Internet and tech stock bubble, Cisco Systems embarked on a(n) _____.

When two firms of comparable size join to form a combined entity

When does a merger between companies typically occur?

acquisition

When large, incumbent firms buy startup companies, the transaction is generally described as a(n) _____.

GD Inc. and VS Inc. join together to form a single new company called GDVS Inc.

Which of the following best illustrates a merger between the two companies GD Inc. and VS Inc.?

It increases the potential for legal repercussions.

Which of the following is a disadvantage of a horizontal integration corporate strategy?

Acquisitions can be friendly or hostile.

Which of the following is true of acquisitions?

The desire to gain a new capability

Which of the following reasons motivated Facebook to acquire Instagram, a photo and video-sharing social media site, for $1 billion in 2012?